General Motors, in the latest blow to Australia's auto industry, will end vehicle and engine manufacturing and scale back engineering operations in the country by the end of 2017.
The company's Holden unit, a mainstay in Australia for decades, cited the high cost of manufacturing in one of the world's smallest but competitive markets and one that has also been upended by a steady rise in imports, mostly from southeast Asia.
There has been widespread speculation of the move in recent days and earlier Tuesday, in Australia, GM officials said no decision had been made.
“We are completely dedicated to strengthening our global operations while meeting the needs of our customers,” GM Chairman and CEO Dan Akerson said in a statement late Tuesday. “The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.”
Australia generates annual sales of about 1.1 million new vehicles, but deliveries of locally produced vehicles have fallen to less than a quarter of total industry volumes, from almost 389,000 in 2005.
Holden, which claims a 10 percent share of the Australian market, posted a loss of 153 million Australian dollars in 2012. It has been a GM subsidiary since 1931 and also serves as a major engineering and design center for the automaker, notably for rear-wheel drive cars such as the Chevrolet SS.
Japan's Mitsubishi Motors Corp. discontinued manufacturing in the country in 2008 and Ford Motor Co. said in May it would shutter its two Australian auto plants in October 2016.
With GM's decision to end production, there is concern Toyota Motor Corp. will follow, prompting a collapse of the country's domestic auto industry that employs more than 40,000 workers and supports 150 suppliers.
GM said about 2,900 jobs will be impacted over the next four years; 1,600 workers at a vehicle manufacturing plant in Elizabeth and approximately 1,300 from Holden’s Victorian workforce.